When a company is dealing with the DoD or NASA, it is usually very clear that their accounting systems are required to not only be compliant with FAR regulations but must be capable of passing a DCAA audit. When dealing with other agencies, such as the NSF, DOE or HHS (mainly the NIH division) it may not be as demanding that the system be capable of meeting these difficult regulations. It may even be less risky as to whether or not the agency will monitor the accounting system in the form of an audit. The agency usually requires audits for awards over $500,000 or $750,000 but they normally put the burden of audit on the awardee. Sometimes the agency may not have time to follow-up to make sure that the awardee is getting the independent audits done and the awardee may come away with a “false sense of security” that they are doing things in a correct manner and within the guidelines allowed by the agency. In fact, the awardee may be violating terms of the award and just does not know it. I have heard of instances where small companies went many years with awards that required the independent “Yellowbook” audits but did not perform them and thought they were in compliance. In one instance I saw one of these companies receive a letter finally from the DOE stating they did not have records of the audits from the previous 8 years and they were requesting these documents be sent to the agency within 30 days or face termination of current funding. Imagine the panic within this organization as they had not done any audits for the last 8 years!Read More
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When a company works with the Department of Energy, many times there is a feeling of "freedom" with respect to a government accounting system. By this I mean that since the Department of Energy does not have the DCAA to come out regularly to check the awardee's accounting system, the burden of compliance falls more directly on the awardee themselves. Many times, awards from the Department of Energy will specify in the contract or grant that the requirements of 10 C.F.R. § 600.316 apply. While this regulation does not specifically call out an audit per OMB Circular A133, there are a lot of references that the audit should "generally follow" the guidelines of A133. Since the A133 Audit was designed for non-profit organizations, it is really not appropriate to say that a full A133 audit is required. None the less, an audit to meet the 600.316 guidelines can be expensive, especially for a small business. Since the burden is on the awardee to pay for and have the audit performed, many times it is overlooked by the awardee and sometimes by the Department of Energy. I have seen recently where the Department of Energy has recognized this deficiency, albeit down the road a ways. The following are excerpts from an actual DOE letter to a grantee noticing problems as much as 7 years old!